The employment relationship

International Labour Conference, 95th Session, 2006


Report V(1)
The employment relationship

Fifth item on the agenda



International Labour Office Geneva

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ISBN 92-2-116611-2
ISSN 0074-6681


First published 2005



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Formatted by TTE: reference Confrep\ILC95(2006)\Report V(1)-2004-09-0068-1
Printed in Switzerland
ATA

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Contents
Page
Introduction ...................................................................................................................... 1
Chapter I. The employment relationship: Overview of challenges and opportunities........
3
Evolution of the discussion at the ILO on the employment relationship ......................
4
The employment relationship and the law .................................................................. 6
The employment relationship and workers’ protection............................................... 8
Context of the lack of protection........................................................................
8
Repercussions of the lack of protection............................................................. 9
Uncertainty with regard to the law ..................................................................... 11
Closing the gap .......................................................................................................... 15
Clarifying the scope of the law .......................................................................... 15
Adjusting the limits of the legislation ................................................................. 15
Balancing equity and adaptability...................................................................... 16
Ensuring compliance......................................................................................... 16
Chapter II. Trends and problems in regulation: A comparative analysis........................... 19
The law and the employment relationship .................................................................. 19
Substantive definitions ...................................................................................... 20
Descriptive definitions ....................................................................................... 21
Parties to the employment relationship ............................................................. 22
Determining the existence of an employment relationship.......................................... 24
The principle of the primacy of fact ................................................................... 24
Determination by law ........................................................................................ 26
Easing the burden of proof................................................................................ 28
Clarifying the scope of the employment relationship .................................................. 30
Defining the scope of the employment relationship ........................................... 31
Delineating the boundary between dependent and independent work............... 33
The combined approach ................................................................................... 35
Categorizing certain types of work .................................................................... 37
Extending the scope of legislation to equivalent workers .................................. 38
Developments in case law ......................................................................................... 38
Regulation of “triangular” employment relationships................................................... 42
Who is the employer (the provider)? ................................................................. 42
What is the position of the user? ....................................................................... 45
What are the worker’s rights? ........................................................................... 47
Compliance and enforcement .................................................................................... 50

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The employment relationship
Page
Chapter III. A new instrument: The basis and possible content of a Recommendation .... 53
Structure of the questionnaire .................................................................................... 54
Content of the questionnaire ...................................................................................... 54
Section I: Form of the international instrument .................................................. 54
Section II: Preamble.......................................................................................... 54
Section III: Content of the instrument ................................................................ 55
Section IV: Other issues.................................................................................... 58
Questionnaire................................................................................................................... 59
Annex 1. Resolution concerning the possible adoption of international instruments
for the protection of workers in the situations identified by the Committee
on Contract Labour ........................................................................................... 71
Annex 2. Resolution concerning the employment relationship ......................................... 72
Annex 3. Employment by status in employment and sex, latest year ............................... 78
Annex 4. List of referenced legislation ............................................................................. 85




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Introduction
1. The question of the employment relationship will be examined according to the
single-discussion procedure established in article 38 of the Standing Orders of the
Conference. The Office has accordingly produced the present summary report on law
and practice, which covers a broad spectrum of existing law and practice in more than 60
ILO member States across different regions and different legal systems and traditions.
The report provides a comparative analysis of the main developments and emerging
trends based on a review of the legal texts, case law and other forms of regulation. It is
accompanied by a questionnaire drawn up with a view to the preparation of a
Recommendation. Governments are invited to give detailed replies to the questionnaire,
on the basis of which the Office will prepare a final report in accordance with article 38,
paragraph 2, of the Standing Orders of the Conference. This final report will contain a
draft Recommendation for consideration by the Conference.
2.
In accordance with the provisions of article 38, paragraph 1, of the Standing Orders,
the present report must reach governments not less than 18 months before the opening of
the 95th Session of the Conference in 2006. In accordance with paragraph 2 of the same
article, the final report must be communicated to governments not less than four months
before the opening of the 95th Session of the Conference. So that the Office has time to
examine the replies to the questionnaire and prepare the final report, governments are
requested to ensure that their replies to the questionnaire reach the International Labour
Office in Geneva by 1 July 2005, or by 1 August 2005 in the case of federal countries
and countries where it is necessary to translate the questionnaire into the national
language.
3.
The Office wishes to draw the attention of governments to article 38, paragraph 1,
of the Standing Orders, which calls on them to consult the most representative
organizations of employers and workers before they finalize their replies. The
governments’ replies should reflect the results of these consultations and indicate the
organizations consulted.
4.
This report is divided into three chapters as follows. Chapter I traces the evolution
over the last decade of the discussions at the ILO on the employment relationship,
including the discussions on “contract labour” in 1997 and 1998, the 2000 Meeting of
Experts on Workers in Situations Needing Protection and the 2003 general discussion. It
also summarizes the most pertinent issues identified by the 39 national studies conducted
in 1999-2001. Chapter II provides an overview of trends and problems in regard to the
manner in which the general aspects of the employment relationship are regulated in
different countries. This is based on a comparative analysis of the relevant laws of more






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The employment relationship
than 60 ILO member States; it elaborates on and supplements the information on law and
practice provided in the report submitted for general discussion to the 91st Session of the
International Labour Conference in 2003. 1 Chapter III briefly introduces the rationale
behind the questionnaire and outlines its structure and content.


1 ILO: The scope of the employment relationship, Report V, International Labour Conference, 91st Session,
Geneva, 2003.
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Chapter I
The employment relationship: Overview
of challenges and opportunities
5.
The employment relationship is a legal notion widely used in countries around the
world to refer to the relationship between a person called an “employee” (frequently
referred to as “a worker”) and an “employer” for whom the “employee” performs work
under certain conditions in return for remuneration. It is through the employment
relationship, however defined, that reciprocal rights and obligations are created between
the employee and the employer. The employment relationship has been, and continues to
be, the main vehicle through which workers gain access to the rights and benefits
associated with employment in the areas of labour law and social security. It is the key
point of reference for determining the nature and extent of employers’ rights and
obligations towards their workers.
6. The profound changes occurring in the world of work, and particularly in the
labour market, have given rise to new forms of relationship which do not always fit
within the parameters of the employment relationship. While this has increased
flexibility in the labour market, it has also led to a growing number of workers whose
employment status is unclear and who are consequently outside the scope of the
protection normally associated with an employment relationship. In 2004, the Director-
General of the International Labour Office described the challenge as follows:
The State has a key role to play in creating an enabling institutional framework to balance
the need for flexibility for enterprises and security for workers in meeting the changing
demands of a global economy ... At the heart of national policies to meet the social
challenges of globalization is a dynamic strategy for managing labour market change. 1
7. The legal framework governing the employment relationship is an important
component of national policy for managing labour market change taking account of the
need for flexibility and security.
8.
The question of the employment relationship has, in one form or another, been on
the agenda of the International Labour Conference for over a decade. The following is an
overview of the evolution of these discussions culminating in the general discussion in
2003. This chapter also summarizes the most pertinent issues raised in the national
studies conducted in 1999-2001, which formed the basis of the report prepared by the
Office for the 2003 general discussion and which are comprehensively analysed and
referenced in that report. 2

1 ILO: A fair globalization: The role of the ILO, Report of the Director-General on the World Commission on the
Social Dimension of Globalization, International Labour Conference, 92nd Session, Geneva, 2004, p. 17.
2 ILO: The scope of the employment relationship, Report V, International Labour Conference, 91st Session,
Geneva, 2003.

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The employment relationship
Evolution of the discussion at the ILO
on the employment relationship
9. The ILO has taken the employment relationship as the reference point for
examining various types of work relationships. In recent years, the Conference has held
discussions on self-employed workers, migrant workers, homeworkers, private
employment agency workers, child workers, workers in cooperatives, and workers in the
informal economy and in the fishing sector. It has also addressed work relationships in
the course of discussions on social security and maternity protection.
10. In 1997 and 1998, the Conference examined an item on “contract labour”. 3 The
original intention of the Conference discussion on “contract labour” was to protect
certain categories of unprotected workers through the adoption of a Convention and a
Recommendation, but the proposal to adopt a Convention and Recommendation failed.
However, at the end of the second discussion in 1998, the Conference adopted a
resolution in which it invited the Governing Body of the ILO to place these issues on the
agenda of a future session of the Conference with a view to the possible adoption of a
Convention supplemented by a Recommendation if such adoption was, according to the
normal procedures, considered necessary by that Conference. The Governing Body was
also invited to instruct the Director-General:
(a) to hold meetings of experts to examine at least the following issues arising out of
the deliberations of the Committee on Contract Labour:
(i) which workers, in the situations that have begun to be identified in the
Committee, are in need of protection;
(ii) appropriate ways in which such workers can be protected, and the possibility
of dealing separately with the various situations;
(iii) how such workers would be defined, bearing in mind the different legal
systems that exist and language differences. 4
11. It is noteworthy that in the various debates mentioned above, delegates from all
regions repeatedly alluded to the employment relationship, in its various forms and with
different meanings, as a concept familiar to all.
12. In accordance with the 1998 resolution, a tripartite Meeting of Experts on Workers
in Situations Needing Protection was held in Geneva in May 2000. 5 The common

3 For the reports of the Conference Committee on Contract Labour and the discussion of the reports in plenary,
see ILO: Record of Proceedings, International Labour Conference, 85th Session, Geneva, 1997, 20th Sitting,
18 June, and Provisional Record No. 18; and Record of Proceedings, International Labour Conference,
86th Session, Geneva, 1998, Provisional Record Nos. 16 and 21. The following documents were prepared by the
Office to serve as a basis for these discussions: ILO: Contract labour, Reports VI(1) and (2), International Labour
Conference, 85th Session, Geneva, 1997; and Contract labour, Reports V(1), (2A) and (2B), International Labour
Conference, 86th Session, Geneva, 1998.
4 Record of Proceedings, 86th Session, op. cit., Provisional Record No. 16, p. 16/73. The full text of the
resolution is reproduced in Annex 1 to this report.
5 The Office prepared the following document as the basis for discussions at the Meeting: ILO: Meeting of
Experts on Workers in Situations Needing Protection (The employment relationship: Scope), basic technical
document (Geneva, 2000), doc. MEWNP/2000, at http://www.ilo.org/public/english/dialogue/ifpdial/publ/
mewnp/index.htm . The report of the Meeting is contained in ILO: Report of the Meeting of Experts on Workers
in Situations Needing Protection, doc. MEWNP/2000/4(Rev.), appended to doc. GB.279/2, 279th Session,
Geneva, November 2000, at http://www.ilo.org/public/english/standards/relm/gb/docs/gb279/pdf/gb-2.pdf .
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The employment relationship: Overview of challenges and opportunities
statement adopted by the Meeting 6 noted that the global phenomenon of transformation
in the nature of work had resulted in situations in which the legal scope of the
employment relationship (which determines whether or not workers are entitled to be
protected by labour legislation) did not accord with the realities of working relationships.
This had resulted in a tendency whereby workers who should be protected by labour and
employment law were not receiving that protection in fact or in law. 7 The scope of
regulation of the employment relationship did not accord with the reality, which varied
from country to country and, within countries, from sector to sector. It was also evident
that while some countries had responded by adjusting the scope of the legal regulation of
the employment relationship, this had not occurred in all countries.
13. The common statement also noted that various country studies had greatly
increased the pool of available information concerning the employment relationship and
the extent to which dependent workers had ceased to be protected by labour and
employment legislation. The Meeting agreed that countries should adopt or continue a
national policy in terms of which they would, at appropriate intervals review and, if
appropriate, clarify or adapt the scope of the regulation of the employment relationship
in the country’s legislation in line with current employment realities. The review should
be conducted in a transparent manner with participation by the social partners. The
experts further agreed that the ILO could play a major role in assisting countries to
develop policies to ensure that laws regulating the employment relationship cover
workers needing protection.
14. Further to the resolution adopted by the Conference in 1998, the Office undertook a
series of national studies. 8 The objective of the national studies was to help identify and
describe the principal situations in which workers lacked adequate protection, as well as
the problems caused by the absence or inadequacy of protection, and to suggest
measures to remedy such situations.
15. The research undertaken confirmed the universal importance of the idea of the
employment relationship, on which labour protection systems are largely based, while
highlighting the deficiencies affecting the scope, in terms of persons covered, of the

6 Report of the Meeting of Experts on Workers in Situations Needing Protection, op. cit., para. 107.
7 The Worker and Government experts believed that this was a growing tendency, but the Employers did not feel
that the extent of this tendency had been proven.
8 A first set of studies on worker protection was carried out in 1999 for the following 29 countries (with the name
of the author or authors in brackets): Argentina (Adrián Goldín and Silvio Feldman); Australia (Alan Clayton and
Richard Mitchel); Brazil (José Francisco Siqueira Neto); Cameroon (Paul Gérard Pougoué); Chile (María Ester
Feres, Helia Henríquez, José Luis Ugarte); Czech Republic (Marcela Kubíncová); France (Françoise Larré and
Vincent Wauquier); Germany (Rolf Wank); Hungary (Lajos Héthy); India (Rajasi Clerck and B.B. Patel); Islamic
Republic of Iran (Kgeshvad Monshizadeh); Italy (Stefano Liebman); Japan (Mutsuko Asakura); Republic of
Korea (Park Jong-Hee); Mexico (Carlos Reynoso Castillo); Morocco (Mohamed Korri Youssoufi); Nigeria (Femi
Falana); Pakistan (Iftikhar Ahmad and Nausheen Ahmad); Peru (Marta Vieira and Alfredo Villavicencio);
Philippines (Bach Macaraya); Poland (Marek Pliszkiewicz); Russian Federation (Janna Gorbatcheva); Slovenia
(Polonca Kontar); South Africa (Halton Cheadle and Marlea Clarke); Trinidad and Tobago (Roodal Moonilal);
United Kingdom (Mark Freedland); United States (Alan Hyde); Uruguay (Antonio Grzetich and Hugo
Fernández); and Venezuela (Oscar Hernández Alvarez and Jaqueline Richter Duprat). When the item was placed
on the agenda for a general discussion, the following new studies were carried out in 2000-01: Bulgaria (Ivan
Neykov); Costa Rica (Fernando Bolaños Céspedes); El Salvador (Carolina Quinteros and Dulceamor Navarrete);
Finland (Mari Leisti, in collaboration with Heli Ahokas and Jorma Saloheimo); Ireland (Ivana Bacik); Jamaica
(Orville W. Taylor); Panama (Rolando Murgas Torrazza and Vasco Torres de León); South Africa (Marlea
Clarke, with Shane Godfrey and Jan Theron); Sri Lanka (R.K. Suresh Chandra); and Thailand (Charit Meesit).
Most of the national studies may be consulted at http://www.ilo.org/public/english/dialogue/ifpdial/ll/
er_back.htm . In this report, these studies will be referred to indicating the name of the country in italics. The
second report on South Africa will be referred to as South Africa 2002.

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The employment relationship
regulations governing this relationship. It also confirmed the extent and repercussions of
the problems of lack of workers’ protection.
16. At the 91st Session of the Conference in June 2003, a general discussion was held
on the scope of the employment relationship. During the discussion, many delegates
emphasized that the concept of the employment relationship is common to all legal
systems and traditions. There are rights and entitlements which exist under labour laws,
regulations and collective agreements and which are specific to or linked to workers who
work within the framework of an employment relationship. One of the consequences
associated with changes in the structure of the labour market, the organization of work
and the deficient application of the law is the growing phenomenon of workers who are
in fact employees but find themselves without the protection of an employment
relationship. There was a shared concern among governments, employers and workers to
ensure that labour laws and regulations are applied to those who are in employment
relationships and that the wide variety of arrangements under which work is performed
by a worker can be put within an appropriate legal framework. 9
17. The Conference also recognized that the protection of workers is at the heart of the
ILO’s mandate. Within the framework of the ILO’s Decent Work Agenda, all workers,
regardless of employment status, should work in conditions of decency and dignity.
18. The Conference noted that the ILO should envisage the adoption of an international
response on this topic. A Recommendation was considered as an appropriate response.
The Recommendation should focus on disguised employment relationships and on the
need for mechanisms to ensure that persons with an employment relationship have
access to the protection they are due at the national level. Such a Recommendation
should provide guidance to member States without defining universally the substance of
the employment relationship. The Recommendation should be flexible enough to take
account of different economic, social, legal and industrial relations traditions and address
the gender dimension. Such a Recommendation should not interfere with genuine
commercial and independent contracting arrangements. It should promote collective
bargaining and social dialogue as a means of finding solutions to the problem at national
level and should take into account recent developments in employment relationships.
The employment relationship and the law
19. The
employment relationship is a legal concept which underpins the operation of
the labour market in many countries. This was confirmed particularly in the discussions
on “contract labour” at the International Labour Conference in 1997 and 1998, the
Conference discussion leading to the adoption of the Private Employment Agencies
Convention, 1997 (No. 181), the national studies undertaken by the ILO, the Meeting of
Experts on Workers in Situations Needing Protection, and the 2003 Conference general
discussion on the scope of the employment relationship. It is also reflected in a
significant number of international labour standards: some ILO Conventions and
Recommendations cover all workers without distinction, while others refer specifically
to independent workers or self-employed persons, and others apply only to persons in an
employment relationship.

9 Conclusions concerning the employment relationship, in ILO: Provisional Record No. 21, International Labour
Conference, 91st Session, Geneva, 2003, pp. 21/52-57.
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